Sh. Ashok Kumar Somani, New Delhi V. ITO, New Delhi

ITA 6912/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3382 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Keywords: Audit objection; Validity of assessment
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6912/DEL./2014 (ASSESSMENT YEAR : 2005-06) SHRI ASHOK KUMAR SOMANI, VS. ITO, WARD 39 (4), SHIV SHAKTI MANDIR, NEW DELHI. IDGAH ROAD, DELHI. (PAN : AANPS5994A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH JAIN, CA REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 06.02.2018 DATE OF ORDER : 19.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI ASHOK KUMAR SOMANI (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 10.10.2014 PASSE D BY LD. CIT(APPEALS)-XXVIII, NEW DELHI QUA THE ASSESSMENT Y EAR 2005- 06 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF ACIT, LEVYING PENALTY U/S 271(1)(C) IN SPI TE OF THE FACT THAT THE SAME WAS LEVIED WITHOUT RECORDING SAT ISFACTION AS TO INITIATION OF PENALTY IN THE ASSESSMENT ORDER . THAT THE FULL BENCH OF HON DELHI HIGH COURT IN THE CASE OF ITA NO.6912/DEL./2014 2 MADHUSREE GUPTA HELD THAT SATISFACTION AS TO INITIA TION OF PENALTY SHOULD BE DISCERNIBLE FROM THE ASSESSMENT O RDER. 2. WITHOUT PREJUDICE TO THE GROUND NO 1- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LEARNED C.I.T (A) ERRED IN SUSTAINING THE PENALTY U/S 271(1)(C) OF THE ACT AT RS.L,76,872/-, WITHOUT CONS IDERING THE APPELLATE SUBMISSIONS AND JUDICIAL PRECEDENTS JUDIC IALLY. THE LEARNED CIT (A) DID NOT APPRECIATE THAT IT IS A CASE OF ESTIMATION OF INCOME BY THE ASSESSING OFFICER AND T HERE IS NO DETECTION OF INCOME CONCEALED BY THE ASSESSING OFFI CER. 3. THAT THE ORDERS AS PASSED BY THE ACIT & CIT(A) A RE NOT BASED ON THE FACTS OF THE CASE AND IN ACCORDANC E WITH THE RELEVANT LAW AND THEREFORE THE SAME ARE LIABLE TO BE QUASHED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF COMPLETED ASSESSMENT U/S 143 (3)/147 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), ASSESSMENT WAS FRAMED AT RS.11,16,780/- AS AGAINST RETURNED INCOME OF RS.6,34,886/-. HOWEVER, DURING ASSESSMEN T PROCEEDINGS, ASSESSING OFFICER NOTICED FROM THE TDS CERTIFICATE THAT TOTAL RECEIPT AS PER TDS CERTIFICATE WAS RS.48 ,11,562/- WHICH ARE NOT MATCHING WITH THE RECEIPTS DECLARED IN THE PROFIT & LOSS ACCOUNT. ON QUERY, ASSESSEE DECLARED HIS NET INCOM E AS UNDER :- S.NO. NATURE OF INOCME GROSS EXPENSES NET 1 . PROFIT IN BOOKING 18,99,657/ - 8,61,357/ - 10,38,300/ - 2 . DELIVERY CHARGES 6,60,423/ - 3,19,223/ - 3,41,200/ - 3 . LABOUR & LOCATING 5,41,784/ - 2,06,143/ - 3,35,641/ - 4 . DEMURRAGE 90,915/ - 32,320/ - 58,595/ - 5 . STAT & MISC. 5,00,614/ - 1,90,386/ - 3,10,258/ - 6 . PROFIT IN TRUCK HIRING 1,43,390/ - 63,380/ - 80,000/ - ITA NO.6912/DEL./2014 3 3. HOWEVER, AO DECLINED TO ACCEPT THE EXPLANATION F URNISHED BY THE ASSESSEE AND TAKEN THE GROSS RECEIPT AT RS.6 0,88,285/- (RS.48,11,562/- (AS PER TDS CERTIFICATE FOR FIRST T WO HEADS OF BOOKING AND DELIVERY CHARGES MENTIONED ABOVE) + RS. 5,41,784/- + RS.90,915/- + RS.5,00,614/- + RS.1,43,390/-). AO A LSO IMPOSED THE PENALTY OF RS.30,441/- ON THE AMOUNT OF GROSS R ECEIPTS OF RS.60,88,285/- U/S 271B OF THE ACT. AO, IN THE AB SENCE OF BOOKS OF ACCOUNT, APPLIED THE NET PROFIT RATE OF 18% AS A GAINST DECLARED RATE OF 15.5% AND THE TOTAL INCOME WAS TAKEN AT RS. 10,95,891/- AND CONSEQUENTLY INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALING THE TRUE PARTICULARS OF INCOME. DECLININ G THE CONTENTIONS MADE BY THE ASSESSEE, AO PROCEEDED TO C ONCLUDE THAT THE ASSESSEE HAS CONCEALED TRUE PARTICULARS OF INCO ME BY FURNISHING INACCURATE PARTICULARS AND THEREBY LEVIED A PENALT Y OF RS.1,76,872/-. 4. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS AFFIRMED THE PENALTY LEVIED BY THE AO BY DISMISSING THE APPEAL. FEELING AGGRIEVED, THE ASSES SEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ITA NO.6912/DEL./2014 4 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, INITIALLY ON THE BASIS OF RETURN O F INCOME FILED BY THE ASSESSEE, HIS INCOME WAS ACCEPTED AT RS.6,34 ,886/- U/S 143 (1). IT IS ALSO NOT IN DISPUTE THAT AO ISSUED A NO TICE U/S 154/155 OF THE ACT, AVAILABLE AT PAGE 3 OF THE PAPER BOOK, ON 28.03.2008 FOR RECTIFYING THE MISTAKE; THAT GROSS INCOME AS PER TD S CERTIFICATE FILED WITH THE RETURN OF INCOME IS RS.48,11,562/-. IT IS ALSO NOT IN DISPUTE THAT NOTICE U/S 148 WAS ISSUED TO THE ASSES SEE ON 27.03.2012 AFTER A PERIOD OF SEVEN YEARS AT THE END OF FINANCIAL YEAR ON THE BASIS OF AUDIT OBJECTION. IT IS ALSO NOT IN DISPUTE THAT THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED MERELY ON THE BASIS OF DIFFERENCE IN NET PROFIT RATE. 7. IN THE FACE OF THE FACTS AND CIRCUMSTANCES OF TH IS CASE THAT FIRSTLY NOTICE U/S 148 OF THE ACT WAS ISSUED ON 27. 03.2012 AFTER A PERIOD OF ABOUT SEVEN YEARS OF THE END OF THE FINAN CIAL YEAR WHICH IS PATENTLY TIME BARRED AND AS SUCH, ASSESSMENT ON THE BASIS OF WHICH PENALTY PROCEEDINGS WERE INITIATED, WAS NOT S USTAINABLE. IT IS SETTLED PROPOSITION OF LAW THAT WHEN THERE IS A DIF FERENCE ON ACCOUNT OF NET PROFIT DISCLOSED BY THE ASSESSEE VIS --VIS NET PROFIT ESTIMATED BY THE REVENUE AUTHORITIES, NO PENALTY CA N BE IMPOSED. TO LEVY THE PENALTY U/S 271(1)(C) OF THE ACT, THE R EVENUE HAS TO ITA NO.6912/DEL./2014 5 BRING ON RECORD THAT THERE IS A CONCEALMENT OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 8. ASSESSEE HAS BROUGHT ON RECORD COMPARATIVE CHART S OF RECEIPTS AND NET PROFIT RATE, AVAILABLE AT PAGE 22 OF THE PAPER BOOK, WHICH IS REPRODUCED FOR READY PERUSAL :- PERIOD ENDING ASST.YR. RECEIPTS NET PROFIT RATE OF NET PROFIT 31.03.2005 2005-06 38,36,803/- 5,99,000/- 15.61% 31.03.2006 2006-07 67,57,877/- 7,65,590/- 11.33% 31.03.2007 2007-08 208,08,167/- 9,09,432/- 4.37% 31.03.2008 2008 - 09 260,02,071/ - 9,73,419/ - 3.71% 9. PERUSAL OF THE RECEIPT AND RATE OF NET PROFIT DE SCRIBED ABOVE SHOWS THAT WHEN RECEIPT AND NET PROFIT CANNOT BE CO NSISTENT ON YEAR TO YEAR BASIS THEN IT MAY FLUCTUATE DUE TO NUMEROUS FACTORS. WHEN THE ASSESSEE HAS GIVEN NET PROFIT AT 15.61% FOR THE YEAR UNDER ASSESSMENT AND THE AO IN THE ABSENCE OF BOOKS OF AC COUNTS AND BILLS/VOUCHERS HAS APPLIED 18%, THOUGH NOT CHALLENG ED BY THE ASSESSEE BY FILING AN APPEAL, IS NOT A GROUND ITSEL F TO LEVY A PENALTY. 10. IT IS ALSO SETTLED PROPOSITION OF LAW THAT THE ASSESSEE CAN RAISE QUESTION OF VALIDITY OF ASSESSMENT DURING HIS APPEA L AGAINST THE LEVY OF PENALTY IN THE CASE OF TIDEWATER MARINE INTERNATIONAL INC. VS. DCIT (2005_ 97 TTJ 0130 , DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL, AVAILABLE AT PAGES 16 TO 23 OF THE CASE LAW PAPER BOOK. WE ARE OF THE CONSIDERED VIEW THAT WHEN ASSE SSMENT ORDER ITA NO.6912/DEL./2014 6 IN THIS CASE IS ITSELF NOT SUSTAINABLE BEING VOID A B INITIO, PENALTY LEVIED ON THE BASIS OF SAME IS ALSO NOT SUSTAINABLE . EVEN OTHERWISE, ASSESSMENT ORDER PASSED IN THIS CASE IS APPARENTLY BARRED BY LIMITATION. 11. MOREOVER, PERUSAL OF THE ASSESSMENT ORDER ITSEL F SHOWS THAT THE AO HAS FAILED TO MAKE OUT THE CASE FOR INITIATI NG THE PENALTY PROCEEDINGS U/S 271(1)(C) PARTICULARLY WHEN DIFFERE NCE IN THE DECLARED INCOME AND ASSESSED INCOME IS ON THE BASIS OF ASSUMPTION AND ESTIMATION ONLY. AO HAS MERELY RECORDED THE ST ANDARD LANGUAGE THAT THE ASSESSEE HAS CONCEALED TRUE PARTI CULARS OF INCOME. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT PENALTY LEVIED BY THE AO AND C ONFIRMED BY THE LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES OF L AW, HENCE HEREBY ORDERED TO BE DELETED. CONSEQUENTLY, THE APPEAL FI LED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2018 TS ITA NO.6912/DEL./2014 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.